Comment by unyttigfjelltol
3 days ago
> It can put you at unlimited risk even if you are absolutely right.
The risk is in borrowing, not short selling. How many momo jockies out there think about the "unlimited risk" from buying Tesla on margin? In that case, you're shorting USD, but no one talks about that because it always will be fashionable to short USD.
Just like it always will be fashionable to short JPY, for carry and more. Until it's not.
Short selling a stock means borrowing shares and selling them.
Short selling has unbounded downside. If you borrow $1,000 to short sell TSLA and then it soars you might end up losing $100,000.
If you borrow $1,000 to buy TSLA your downside is limited—you can’t possibly lose more than $1,000.
In either case, your broker will liquidate you around $0. Not guaranteed, but very likely. This is the key risk.
Tether provides a good illustration of the principle I mentioned-- which I concede is a bit theoretical in the case of USD:
Tether is supposed to trade at $1 and gets press when it trades below. But, sometimes it also trades above, at $1.01, $1.02 and even perhaps $1.03. So, if you sold a lot of it thinking trading higher was impossible, you can be surprised.
You can short USD by buying Bitcoin or a similar non-correlated asset but how could buying a usd correlated asset (TSLA) be shorting?
Stocks are generally not considered tied to currency- if the company has some fundamental value, that should be inflation proof.
So technically buying almost any stock can be a way of shorting the USD in that you are selling it now and will buy it back later.
The risk - besides that of the company itself- I suppose is that if you have massive deflation you will end up with less USD. I don’t think anyone is worried about massive deflation of the USD, since the Fed can and would prevent that.
Stocks have been a great inflation hedge in the long term since they’re usually backed by hard assets and people, not numbers in computers. Short term obviously some businesses are hurt by inflation and some benefit.
You can also short the USD by buying a different currency. BTC would be more like shorting all currencies.
Buying BTC is shorting money printing by your government.
Today the only government (that I know of) committed to not printing money is Argentina but they have other issues affecting their economy and therefore inflating their currency.
Given that governments don't seem to have desire stop money printing any time soon, buying BTC is sound.
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